Who can create Pleadge?

Answer

Anyone who is in legal possession of the goods can pledge them. The parties who can make a valid pledge are:

a)     The owner of the goods himself.

b)     Mercantile agent (Section 178 of Contract Act 1872)

c)     A person, who has obtained possession of goods by fraud, mis-representation  coercion or undue influence, such person shall create a valid pledge provided the following conditions are fulfilled.

i)    The contract has not been rescinded before he enters into the contract of pledge.

ii) The pledge acts in good faith without knowledge of the defective title of the pledger. This principle does not apply to a thief who has no title to goods and can give none.

d)     Joint owner with the consent of other co-owner (s).

e)     A person who, with the consent of the seller, obtains possession of the goods or documents of title to the goods for which the title has not yet passed to that person provided the pledge acts in good faith and without notice of the pledger’s defect in the title therto.

f)    A seller who is in possession of the goods after selling them, can create a valid pledge provided the pledge must act in good faith and without notice of the previous sale.

g)     A pledge may repledge the goods for borrowing money to the extent of his interest in the said goods.